The
Korea International Trade Association (KITA) has suggested a high-value-added
premium products for the high-income class, education, tourism and leisure
products for the middle-income class and daily necessities and durable goods
for the low-income class respectively, as the market strategies for theBrazilian consumer
market with a population of 210 million.

According
to the report titled "Brazil’s Consumer Market Analyzed Based on Consumer
Composition" issued by the Institute for International Trade (President,
Shin Seung-kwan) of the Korea International Trade Association, Brazil, which
has the largest consumer market in Latin America, has recovered from recession
since last year and is showing signs of recovery and has a high growth
potential for the future. Under the circumstance that Korea’s foreign trade
needs to reduce its dependency on the United States and China, Brazil is a
promising alternative market.

In
terms of Brazilian consumers, the C-class (income level 100 ~ 150% of the
average), which corresponds to the middle class in the social class, is rapidly
growing. People in this class have the high level of discretionary expenditure
on non-necessities and various consumer durables, education, and
tourism-related products are the main beneficiaries. In particular, the
emerging middle class, which is newly included in the middle class by getting
out of the low-income class, is seeking ways to differentiate itself from the
low-income class and increase their consumption of comfort, leisure and
relaxation.

In
terms of population size, the E-Class (income level lower than 50% of the
average), the lowest-income class, is overwhelmingly large, accounting for 39.7
percent of the total population. Although their individual purchasing power is
low, the related market is expected to grow thanks to the improved
infrastructure such as electricity and water, increased education
opportunities, more mobile phones, and increased disposable income. On the
contrary, the A-Class (income level more than 200% of the average), the highest
income group, has small population proportion taking up only 8 percent, but the
number of population is 14.14 million and they are leading the Brazilian
consumer market. In Brazil, it is important to focus on high value-added
products, since there are many cases where local sales prices are higher than
export prices due to its complicated tax systems.

The
shapes of households are diversified due to the changes in lifestyle. In recent
years, the number of single-person households with high purchasing power has
increased rapidly, the number of parents without a child and the number of
single-parent households is expanding. Thus, it is expected that demand for
small furniture, home appliances, simple meals, pet supplies, and leisure goods
will increase.

Yoo
Seung-jin, a researcher at the Institute for International Trade, said “Since there is ‘brazil cost’
referring to Brazil’s high tax rate, bureaucracy and complicated labor
management and logistics, Korean companies need to careful when it comes to
market segmentation, customer targeting, and selection of entry areas."
The researcher also advised, "The Brazilian economy is recovering, but
there are always risks from both inside and outside the country, such as
exchange rate fluctuations and uncertainty over the presidential election in
the second half of the year, so we need to continuously monitor and respond to
the market."

<Characteristics of Major Social Classes >

Social
class

Income
level ( Compared to Average)

Features
and Consumption Behavior

Promising
Areas

A-Class

Over
200%

The
proportion is small, but it has 14.14 million people.

Important
group for exporters, considering Brazil's high import prices due to a
complicated tax system.

They
continue their active consumption activities even in the economic downturn.
Their consumption will be stronger as the economy is getting better.

Education, communication,
transportation,

Premium consumer goods, etc.

C-Class

100~150%

Record the fastest growth

Segments of 20s and 30s are
bigger than other segments

The emerging middle class seeks
to identify their social status through consumption and to differentiate
themselves from the low-income class